Dairy Firm-Farmer Relationship
A Case Study of Nyanza Dairy, Rwanda
A Research Project submitted to Van Hall Larenstein University of Applied Sciences In Partial Fulfillment of the Requirements for the Degree of Master in Management of
Development, Specialization in Rural Development and Food Security
By
Anatole Majyambere
September 2012
ii Acknowledgement
First and foremost I give thanks and glory to the Lord Almighty for having granted me such an opportunity and wisdom all through my studies.
I am very thankful to Mr. Marco Verschuur, whose knowledge of the dairy sector in Rwanda, constructive critics and comments motivated me to work harder.
I am deeply grateful to Mr. Eddy Hesselink, the course coordinator of Rural Development and Food security and my advisor for his guidance and encouragement.
I would also like to take this opportunity to heartedly thank the Government of the Netherlands to have sponsored my studies through NFP program and my employer, Kigali Institute of Science and Technology, KIST to have allowed me a one year study leave.
Lastly, I would like to express my deep appreciation first to Mr. Murasira Pascal for his assistance during the data collection, MissIngabire Bonnylove Basaza for her time editing this work and to everyone who directly or indirectly contributed to the completion of my studies.
iii Dedication
To my late father who would have been happy to see his son’s achievements, to all my family members and friends who left us early, to my lovely mother, brothers and sisters and to all my good friends.
iv Contents Acknowledgement ... ii Dedication ... iii Contents ... iv List of tables ... vi List of figures ... vi
List of abbreviations ... viii
Abstract ... ix
1. INTRODUCTION ... 1
1.1. Back ground of the study ... 1
1.2 Problem statement ... 4
1.3 Research objective ... 5
1.4 Main research questions ... 5
2. CONCEPTUAL FRAMEWORK ... 6
2.1. Introduction ... 6
2.2. Milk value chain analysis ... 6
2.3. Firm-farmer relationships ... 9
2.3.1. Farmer groups ... 9
2.3.2. Farmers cooperatives in Rwanda ... 9
2.4. Dairy farming and food security ... 11
3. RESEARCH METHODOLOGY ... 12
3.1. Type of research ... 12
3.2. Research area ... 12
3.3. Data collection ... 12
3.4. Data processing and interpretation of scores ... 14
3.5. Debriefing and focus group discussions ... 15
3.6. Limitation of the study ... 15
4. NYANZA DAIRY BUSINESS CLUSTER ... 17
4.1. Business case current situation ... 17
4.2. Cooperatives ... 18
4.2.1. Functioning of the cooperatives ... 18
4.2.1..1. Gwizumukamo cooperative ... 18
4.2.1.2. Turengere Aborozi Cooperative ... 19
4.2.2. Challenges faced by farmers ... 19
4.3. Milk collectors (Abakamyi in Kinyarwanda) ... 20
4.4. Production ... 21
4.5. Quality and standards ... 21
4.6. Markets and prices ... 22
4.7. Contracts ... 23
4.8. Cost and benefits ... 23
4.9. Business assessment results ... 24
4.9.1. Busoro MCC results ... 24
4.9.2. Buhanda MCC results... 35
4.10. Debriefing and focus group discussions ... 48
v
4.11.1. Milk collection and processing ... 49
4.11.2. Relationship with farmers ... 49
5. ANALYSIS AND DISCUSSIONS ... 50
5.10. Cooperative functioning ... 51
5.11. Market and prices ... 51
5.12. Contracts ... 52
5.13. Quality and standards ... 52
5.14. Cost and profits ... 53
5.15. Comparison between Gwizumukamo and Turengeraborozi cooperatives vis-a-vis Nyanza dairy ... 53
6. DAIRY FARMING AND FOOD SECURITY ... 55
7. CONCLUSION AND RECOMMENDATIONS ... 56
7.10. Conclusion ... 56
7.11. Recommendations ... 56
References: ... 58
Appendixes A: Questionnaire (Busoro) ... 60
Appendix B: Average scores per challenge area, Busoro ... 64
vi List of tables
Table 1.1.1: Dairy product importation and production ... 3
Table 1.1.2: Performance of existing milk processing units in Rwanda (2007) ... 4
Table 3.3.1: Selection of respondents for case description ... 13
Table 3.3.2: Clustering of our respondents (Busoro farmers) ... 14
Table 3.3.3: Clustering of our respondents (Busoro farmers) ... 14
Table 4.4.1:Milk collected and sold by Busoro MCC ... 21
Table 4.9.1: Challenge areas, Busoro ... 24
Table 4.9.2: Statements production ... 25
Table 4.9.3: Statements Challenge area cooperative functioning ... 26
Table 4.9.4: Statements challenge area market and prices ... 28
Table 4.9.5: Scores for contract and agreements ... 29
Table 4.9.6: Statements, quality and standards ... 31
Table 4.9.7 Statements, Cost and benefits ... 32
Table 4.9.8: Statements, Stakeholders ... 34
Table 4.9.1: Cooperative functioning ... 40
Table 4.9.2: Statements, Dairy functioning ... 41
Table 4.9.3: Prices and markets ... 43
Table 4.9.4: cost and benefits ... 44
Table 4.9.5: Statements, Stakeholders ... 46
Table 4.9.6: Statements, Perspectives ... 47
Table 5.15.1: Overall scores Buhanda ... 53
Table 5.15.2: Overall results Busoro ... 53
Table 5.15.3: Challenge areas for both Buhanda and Busoro ... 54
List of figures Figure 1.1.1: Cattle and dairy production ... 2
Figure 2.2.1: Value chain structure ... 6
Figure 2.2.2: Value chain map ... 7
Figure 3.2.1: Map of Rwanda, showing Nyanza and Ruhango districts ... 12
Figure 3.3.1: Farmers during business assessment ... 14
Figure 3.4.1: Sample scores pre challenge area ... 15
Figure 4.1.1: Nyanza dairy building ... 17
Figure 4.3.1: Milk collector ... 20
Figure 4.5.1: Milk reception at Nyanza dairy. ... 22
Figure 4.9.1: Overall scores ... 24
Figure 4.9.2: Level of agreement per challenge area ... 25
Figure 4.9.3 Scores production ... 25
Figure 4.9.4: Level of agreement on production ... 26
Figure 4.9.5: Scores, Quality and standards ... 31
Figure 4.9.6: Level of agreement, quality and standards ... 32
Figure 4.9.7: Level of agreement, Cost and benefits ... 33
Figure 4.9.8: Level of agreement, Cost and benefits ... 33
vii
Figure 4.9.2: Level of agreement, production ... 38
Figure 4.9.3: Scores, quality standards ... 39
Figure 4.9.4: Level of agreement, quality and standards. ... 39
Figure 4.9.5 Cooperative functioning ... 40
Figure 4.9.6: Level of agreement Cooperative functioning ... 41
Figure 4.9.7: Scores, cooperative functioning ... 42
Figure 4.9.8: Level of agreement, Dairy functioning ... 42
Figure 4.9.9: Prices and markets ... 43
Figure 4.9.10: Level of agreement, Prices and markets ... 44
Figure 4.9.11 Scores, Cost and benefits ... 45
Figure 4.9.12: Level of agreement, cost and benefits... 45
Figure 4.9.13: Scores, stakeholders ... 46
Figure 4.9.14: Level of agreement, stakeholders... 46
Figure 4.9.15: Scores, perspectives ... 47
Figure 4.9.16: Level of agreement, perspectives ... 48
Figure 4.11.1.1: New packaging ... 49
Figure 4.11.2.1: Price distribution between farmers and milk collectors... 50
Figure 5.11.1: Milk chain in Nyanza ... 52
viii List of abbreviations
BRD: Bank Rwandaise de Dévelopement CDI: Centre for Development Innovation
EADD: According to East African Dairy Development
EDPRS: Economic Development and Poverty Reduction Strategies FAO: Food and Agriculture Organization
GoR: Government of Rwanda
ICA: International Cooperative Agency IDP: Integrated Development Program
ISAR: Institut des Sciences Agronomiques du Rwanda
KIT: Koninklijk Institute voor de Tropen (Royal Tropical Institute) MCC: Milk Collection Center
MINAGRI: Ministry of Agriculture and Animal Resources NISR: National Institute of Statistics of Rwanda PADEBL: Project d’Appui au Dévelopement Bovin Laitier RARDA: Rwanda Animal Resources Development Authority RBS: Rwanda Bureau of Standardization
ix Abstract
The dairy sector in Rwanda is still under development, the same applies to other agricultural activities. Currently the whole country has only 3 dairy plants, Inyange dairy, Nyanza dairy and Rubirizi dairy. The country counts 61 operating milk collection centers. Nyanza dairy is located in the southern province in Nyanza district and collects milk from both Nyanza and Ruhango districts. The dairy has been in existence since 1937 and its current status is dominated by old facilities, buildings and machinery.
This report is a result of a study made to assess business relationships between Nyanza dairy and famers and to test the applicability of the 2-2 Tango tool. The dairy works with four cooperatives but this study focused on two of them: Gwizumukamo located in Busoro sector and Turengeraborozi from Kirengere Buhanda. To achieve the study’s objective 2-2 Tango research tool was used. This is a participatory tool which is based on the scoring of same statements. Three people were interviewed from the dairy, four from farmer’s cooperative and two milk collectors to get an over view of the current relationship. After this, statements were formulated, twenty four farmers and three staff of the dairy participated in the scoring.
Business relations between farmers and the Nyanza dairy are based on milk supply agreements. Between cooperatives and individual farmers who are able to supply milk to the dairy. The study revealed that there are some challenges on both sides mainly the need for innovation and extension for the dairy; low milk production, poor milk quality, lack of artificial inseminations, low prices for farmers and late payments. It showed that the relationship is to some extent not very good with an average score of 56.8 percent for Nyanza Dairy-Busoro farmers and 57.1 percent for Nyanza Dairy-Buhanda farmers. It was also noticed that there is a good will on both sides to work towards a good business relationship for a betterment of the milk business.
The 2-2 Tango tool proved to be a good assessment tool especially by its simplicity in data collection (Scoring) and processing. However some minor difficulties were encountered. With regards to the study, there was reluctance from farmers to avail themselves for the research and differentiation between the researcher and the dairy which might have biased their answers. With regard to the tool, there were difficulties to formulate statements that can be easily answered by both sides, and it was realized that there is a need for a scoring trial before the scoring process.
1. INTRODUCTION
The drive of this research comes from two main reasons. Firstly it is done as a thesis for the partial fulfilment of the requirements for Master’s degree in Management of Development with a specialisation in Rural Development and Food Security at Van Hall Larestein University of Applied Sciences, part of Wageningen. Secondly, it is a study for the CDI for the development of the new research tool known as “2-2 Tango research tool” The aim of the research is to assess the relationship between farmers and companies that process their agricultural products, a case study of Nyanza dairy and dairy farmers.
1.1. Back ground of the study
Rwanda is located in the great lakes region of central Africa, 1200 km away from the Indian Ocean and 2000 km from the Atlantic Ocean, bordered by Burundi, Tanzania, Uganda and Democratic Republic of Congo. With the population of about 10.7 million on an area of 26,338 square kilometers, it becomes the highest densely populated country in Africa. About 406 people per square kilometer. Rwanda is known as a one thousand hills country, due to its natural topography where about 80% of the total land is hilly and mountainous. (NISR, 2010) The altitude ranges between 900 m and 4.507 m (Twagiramungu, 2006). Nyanza district is located in the Southern province of Rwanda with 671, 2 km², and 88 Kilometers away from Kigali the capital city of Rwanda. It has a population of around 225.209 and is believed to be the second largest in cattle population after Nyagatare district. Nyanza district has an estimation of 17% of cattle and is the second after Nyagatare District. (MINAGRI, 2009)
Milk sector in Rwanda
Policy
Cattle have an important role economically and culturally in Rwanda. In 2006, a survey indicated that the number of cattle amounted to 1, 2 million. This number has been considerably increasing as the Government of Rwanda (GoR) has been investing more in animal cattle. (Technoserve, 2008) Through the project one cow per poor household the GoR planned to distribute milking cows to 257,000 households by the end of 2017. The main aims of this project are to fight poverty by increasing milk production and crop production through the use of manure.
2 Figure 1.1.1: Cattle and dairy production
Milk products have had an important place in the Rwandan society since ancient times. Milk has been consumed at the household level or exchanged within families. The majority of consumers prefer the traditionally fermented milk locally known as ikivuguto1 to the processed milk which is also cheaper than processed milk (Olok, 2001). The importance of milk has been limited to consumption but not for trading. We can justify this by the fact that the main purpose of having cows in Rwanda has been for manure, meat and mostly for social functions and social status. According to FAO (2011) by the end of 2011, the total milk production was estimated to 401.000 tons. Technoserve (2008) estimates that out of the total production, 5% is collected through milk collection centers. The main reason for this is that milk collection centers are not in every corner of the country and those that are available, the distance from farmers to MCCs is still a barrier. The other reason, as mentioned in the paragraph above, due to consumer’s preferences, a large quantity of milk does not need to be modernly processed. Almost everyone in Rwanda can ferment milk. Despite a considerable increase in milk production, Rwanda is among the lowest milk-producing countries in the world, with mere 3.2 litres produced per cow per day compared to 36 litres in the United States. Of the 1.2 million cattle in the country, 13.6 per cent produce milk (Technoserve, 2008). The country still imports important quantity of dairy products in order to meet the internal demand but as shown in the table below, imports have been decreasing considerably.
1
Ikivuguto is the local name of the fermented milk. This is the type of milk that most of Rwandans consume as it is easily produced by using simple techniques.
3
Table 1.1.1: Dairy product importation and production
Year Production/Tons Importation/Tons 1999 55,577 1,280 2000 57,853 1,378 2001 63,484 1,687 2002 98,981 1,378 2003 112,463 720 2004 127,417 645 2005 133,612 500 2006 152,511 500 2007 158,764 450 Source: Rutamu, 2007 Dairy processing
Currently the country has three dairy plants. Nyanza Dairy formally known as Nyabisindu dairy is the oldest as it started in 1937. Others are Rubirizi and Inyange .Milk production has been increasing drastically due to the “Girinka program (One cow per poor family) project“, crossbreeding and introduction of exotic cows. This project was inspired by the Rwandan culture and initiated in 2006. The program is considered part of the 2020 vision, Economic Development and Poverty Reduction Strategies (EDPRS) and Integrated Development Program (IDP) implementation measures. This program aims at enabling every poor household to own and manage an improved dairy cow which would help the family to better their livelihood through increased milk and meat production and to improve soil fertility of their land for their crops using the available manure. By the end of 2007, Nyanza district had received 610 improved milk cows. For the last ten years, the Government of Rwanda has invested more money in the dairy sector, like the construction of 50 new milk collection centers, implemented several policies that are expected to boost both the quantity and quality of milk but still the journey to success is too long. Through its vision 2020, the main target is modernization. One of the pillars of the vision is the transformation from subsistence to a productive, high value, market-oriented Agriculture that has an impact on other economic activities (Butera & Rutagengwa 2004).
4
Table 1.1.2: Performance of existing milk processing units in Rwanda (2007)
Source: Rutamu, 2007
Nyanza Dairy (formerly known as Nyabisindu) is the main actor in the milk sector in Nyanza district. Part of the processed milk, around 30%, comes from Songa farm, a farm owned by the dairy and the other part is collected from four cooperatives, Giramata, Jyambere, Twiyorore and Gwizumukamo, and the other is collected from different individual farmers in the area.
Due to several factors such as the lack of infrastructure, low investments, and the topography; and due to the fact that milk is highly perishable, post-harvest milk loss is a major constraint affecting the efficiency of milk production in Rwanda. According to Staal (1996) raw milk is highly perishable, and thus requires rapid transportation to consumption centers or for processing into less perishable forms. In 2007, the milk and milk product imports were 450 tons. The modernization policy encouraged by the Government of Rwanda is good to some extent as it adds value to milk production. The success of such initiative may not be in the near future while milk production has been increasing considerably and there might be a risk of it contributing to milk industry destruction rather than its development because it tends to ignore local market needs and preferences. Farmers may lose interest to continue investing in milk production if the future does not promise tangible profits. There is a need to insure that the farmer gets good market for his produce and the best way would be to encourage local consumption. To access the local market, there is a need to assess what the local consumer needs and what are the possible, cheap and sustainable ways of processing for the local market accordingly.
1.2 Problem statement
Despite several efforts by the Government of Rwanda to support the milk sector, dilemmas still remain many. According to East African Dairy Development (EADD, n.d.), around 5% of the total milk produce is collected through milk collection centers. Processing units are significantly not performing at their capacity, milk demand is high and the country has to import milk and milk products in order to cover the gap. Today, nutrition and food security are one of the challenges the Government of Rwanda is trying to fight. Milk is considered to be one of the solutions, thanks to its nutritive value and can also be a source of money to poor farmers. There are
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several factors that lead to the malfunctioning of the dairy sector in Nyanza district, but there are still possibilities to identify those constraints and find sustainable solutions if farmers work hand in hand with Nyanza dairy. Dairy sector depends on several factors and this makes its study a bit complex. Further researches on the Nyanza dairy have been done but no specific interest was given to the relation between farmers and processors.
1.3 Research objective
The objective of this research is to assess firm-farmers relationship, between Nyanza dairy and farmers in order to strengthen the milk value chain.
1.4 Main research questions
1. What is the current form of Nyanza Dairy business cluster? 1.1. Who are actors in the milk value chain?
1.2. What are the services to farmers who supply milk to Nyanza Dairy? 1.3. What is the share distribution of costs and benefits?
1.4. What are alternative market channels for farmers?
2. What is the relationship between farmers and Nyanza Dairy? 2.1. What is the power relationship between the Dairy and farmers?
2.2. What is the perception of farmers towards services offered by the Dairy? 2.3. What is the value of their membership to the business cluster?
3. What is the contribution of milk production to food security? 3.1 What is the contribution of milk to food availability?
3.2 What is the contribution of milk production to income generation? 3.3 How does milk affect food stability?
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2.
CONCEPTUAL FRAMEWORK
2.1. Introduction
In this chapter we will deal with the conceptual framework and information related to dairy sector. To have a broad overview we will first look at it on the East African level then on the national level and finally in Nyanza district. In this literature study we will also study the contribution of dairy sector to food security, and at the end of this study we shall be able to also look at the relationship between farmers and other actors.
2.2. Milk value chain analysis
To understand how a business or firm operates, the value chain is one of the effective tools to use. Porter (1985) defined a value chain as a sequential set of primary and support activities which are required to bring a product or service from conception, through the different phases of production (involving a combination of physical transformation and the input of various producer services), delivery to final consumers, and final disposal after use. It serves as a tool to firms to master internal and external process, hence improving the efficiency and effectiveness. Like many other agricultural products the chain is quite complex. The dairy value chain starts with the raw product/milk supply at the farm level and ends with consumers who make the choice to buy, or not to buy, the finished product. The dairy value chain has several links between the farm and the consumer: procurement, transportation, processing, commodity storage, conversion packaging, distribution, retailing, and food services. According to Rukazambuga (2008) the dairy marketing system in Rwanda, is composed of two main marketing systems. Raw milk which is traded through milk hawkers to either final consumers or retailers, and the processed milk by small and large scale processing units mostly to high income consumers. (Gorton, White et al. 2007)
7 Figure 2.2.2: Value chain map
2.2.1. In put suppliers
Livestock production in Nyanza as well as in other districts of Rwanda has, for long, remained traditional with limited market-orientation and poor investments. Producing for the market requires re-orientation of the production system and development of a knowledge based and responsive institutional support services. The majority of cattle is made of indigenous breeds and sometimes crossbreeds of local breeds and exotic cattle. In order to improve the milk production the district is encouraging farmers to do artificial inseminations.
For farmers to buy feeds in order to increase milk production, it is expensive as presently there are no factories for animal feeds, and they prefer to feed animals with local forage.
2.2.2. Producers
Milk production in Nyanza district is largely from smallholder farmers. Due to improvement of indigenous breeds and introduction of exotic cows the production has been increasing significantly during the last five years. Farmers are individuals who own one to three cows. It is estimated that Nyanza district only produces around 28 million liters per years. At this level, all the milk is sold without any value addition.
8 2.2.3. Traders and Transporters
Nyanza dairy plant is the only milk processor in the area. It produces fermented milk and yoghurt. From the farms, milk is collected by milk collectors through milk collection centers which deliver it in bulk to the dairy. A number of milk kiosks are found along the high way of Kigali-Huye and they all sell a considerable quantity of milk.
Nyanza District is crossed by the main road to Kigali the capital city. The city centers near the road have been developing thanks to milk trading. It has been a culture that any car passing by has to stop for ten to 15 minutes to allow passengers to buy milk. A small plastic container of 4 litres cost around 1200-1500 Frw. People believe that “amata y’i Nyanza” to mean milk from Nyanza is of good quality and of course it is much cheaper. There are always conflicts between milk collection centres and middle men because middle men pay much higher than MCC. From farms to milk collection centres or to shops, milk is transported in metal cans on bicycles. All milk collectors who bring milk to MCC use metallic cans. Plastic jerry cans are forbidden as they are significantly associated with poor hygiene (Omore, 2005). This is believed to be one of the major causes of milk loss as transporters have to cover long distances under the sun. This activity is exclusively done by men. Middle men supply fresh milk to MMCs and MCCs only cool it while waiting to deliver it, to either the processing plant or to shops.
2.2.4. Main milk sellers
There are several categories of milk sellers. Milk selling process starts with farmers who sell to milk collectors or to direct consumers. After collection MCCs sell it to Nyanza dairy plant or to local restaurants and kiosks. Most MCCs have been built under the assistance of the Government of Rwanda, the Rwanda Development bank and the African Development Bank. MCCs belong to cooperatives and cooperatives are owned and controlled by men and women with equal rights. Nyanza dairy plant also sells its processed products to supermarkets, in the capital city and other town cities in the country. Hadgi enterprise is another main milk seller in the area and its specialization is the curd milk. Shops near the main roads are the main sellers of milk produced in Nyanza District. It is not easy to estimate the amount of milk sold at this level.
2.2.5. Consumers
Consumers of Nyanza milk are scattered all over the country and outside the country. The first category is of those who buy fermented milk from different shops. This category is made of people of mild and high income. The fermented milk is mostly packed in four litre’s plastic container and it is much cheaper. A litre costs around 400 Frw while a litre from the milk plant costs between 800-1000 Frw. The processed milk, packed in 1 or ½ litre from Nyanza dairy is also available in different supermarkets and this is generally consumed by high income consumers as it is expensive and mostly found in supermarkets and shops. Nyanza dairy plant produces yoghurt. This product is considered as an exotic product.
9 2.2.6. Supporters
Dairy value chain supporters are mainly made of the Government and development NGOs. Below are some of the most involved institutions and their roles, and in what way they support farmers.
RARDA: Rwanda Animal Resources Development Authority. This is a department under the Ministry of Agriculture whose its main mandate is to implement the National Animal Resources Policy, to provide improved technology and extension services to farmers and other individuals dealing with products of animal origin, in order to help them modernize their operations so as to increase marketing of products and raise their incomes, and many other activities that aim to maximize the animal production capacity of Rwandan farmers.
MINAGRI: The ministry in charge of agriculture is the overseer of the Government to all activities related to agriculture and livestock. Its actions go from input supply to the last consumer as it somehow influences prices through price regulations.
BRD: Bank Rwandaise de Dévelopement. This is the main financial resource for all big projects in agriculture. All milk collection centres in Nyanza district have benefited from its support. RBS: Rwanda Bureau of Standardization. The RBS plays its role in quality control of feeds, equipment, processing processes and selling of the last products. In addition to setting up standards, it also trains different stakeholders.
2.3. Firm-farmer relationships 2.3.1. Farmer groups
Farmers and all other actors need to understand that the success of one will be the success of the other one. According to KIT, 2008 empowerment of producers cannot be addressed without taking into account their relationship with other chain actors. They further highlight that empowerment is a process that impacts on various social structures and personal relationships. Every product follows a defined chain which most of the times, starts from the farmer and always ends with the last consumer, and this means that the disappointment or satisfaction of one of the chain actor will affect the whole chain. The benefits of all actors who collaborate are explained by the KIT. Actors in the chain who work well together and trust each other can become partners and engage in dialogue with the Government to create more supportive policies and actions on such key issues as taxation, research support and infrastructure. (KIT & IIRR, 2008)
2.3.2. Farmers cooperatives in Rwanda
Co-operatives are businesses owned and run by and for their members. Whether the members are the customers, employees or residents they have an equal say in what the business does and a share in the profits.(ICA, 2012). Watkins, 1986 defines a cooperative as an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. Based
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on the definition above, one may argue that what are the real values of cooperatives in Rwanda or how do farmers value and perceive their associations into cooperatives? To a great extent any perception that does not go in line with the definition is the result of how they were initially introduced in Rwanda. After independence, the Government used cooperatives as instruments of implementation of its policies and plans, thus becoming a tool for politicians. This attitude led to misconception of the notion of “cooperative “with “Associations” (RCA, 2006). In addition to the false foundation, cooperatives in Rwanda are also endangered by dependency culture. The RCA, 2006 recognizes that in addition, to the foregoing negative effects on the cooperative movement the State and development agencies including donors introduced the culture of dependency by conditioning external assistance to the formation of cooperatives and other forms of associations. Thus, members look at cooperative as a means of only getting financial assistance from donors rather than as an economically productive enterprise. Farmer’s cooperatives which are the focus of this research do not escape from this trail.
There are several types of cooperative. According to the Rwanda Cooperative Agency (RCA, 2006) the most common in Rwanda are savings and credit cooperatives, banking cooperatives, agricultural cooperatives, small processing and marketing cooperatives, fishery cooperatives, Consumers, workers, handicraft and artisanal cooperatives. Potential for other activities are many.
The Government is convinced that cooperatives among other social benefits would contribute to the achievement of its Vision 2020 (RCA, 2006). A lot of efforts have been made to change people’s mindset about cooperatives, so that they can consider them as businesses.
2.3.3. Aspects of Relationship between farmers and firms
The farmers and companies in agriculture are linked by different aspects. In this section, I will discuss some of aspects which are prevalent between Nyanza dairy and dairy farmers. Trust and support
Aspects of firm-farm relationship evolve around the milk market and supply. Milk market and supply is also linked to many other factors and in their studies, Dries et al. (2007) explained that the satisfaction of famers with their main buyers is significantly based on the trust and support measure. (Gorton and White, 2007) cited in Dies et al. (2007) argues that support to farmers stimulates yield increases and improves the quality.
Organization
Working with small scale farmers would be difficult if farmers are not organized in groups. But organization does not only mean being in a group of farmers but also the whole functioning of such organization. In their paper, (Bill, Lundy,
MacGregor, 2007) revealed that one of the
biggest challenges to large business working with small scale farmers is to get them organized. Getting farmers organized reduces transaction costs and facilitates communication.Contracts and agreements
Contract farming is defined as a form of 'vertical coordination' by agribusinesses as well as a sourcing mechanism that lies between spot market purchases and production at owned
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or rented land ('vertical integration') (CEPAL/GTZ/FAO 1998,) in (Echánove and Steffen 2005). In his work, (Barry, Sonka et al. 1992) discuses that contracts in agriculture are generally incomplete. This is in most cases due to many uncertainties in agriculture. Contract farming is expected to bring benefits to farmers. However, as argued by (Glover and Kusterer, 1990; Little and Watts, 1994) cited in (Key and Runsten 1999), contract farming in African context has been observed to disrupt power relations and to increase tensions within households.
2.4. Dairy farming and food security
Livestock production constitutes a very important component of the agricultural economy of developing countries, a contribution that goes beyond direct food production to include multipurpose uses, such as skins, fibre, fertilizer and fuel, as well as capital accumulation. Furthermore, livestock are closely linked to the social and cultural lives of several million resource-poor farmers for whom animal ownership ensures varying degrees of sustainable farming and economic stability (FAO, 1995). This situation applies also to the Rwandan case in all its aspects.
Before I talk about the link between food security and the dairy industry, let’s first talk about food security itself. Today, there is no single definition of food security. FAO, 2006 acknowledged four dimensions as the main point to look at when thinking about food security. Those dimensions are:
Food availability: The availability of sufficient quantities of food of appropriate quality, supplied through domestic production or imports, including food aid.
Food access: Access by individuals to adequate resources (entitlements) for acquiring appropriate foods for a nutritious diet. Entitlements are defined as the set of all commodity bundles over which a person can establish command given the legal, political, economic and social arrangements of the community in which they live (including traditional rights such as access to common resources).
Utilization: Utilization of food through adequate diet, clean water, sanitation and health care to reach a state of nutritional well-being where all physiological needs are met. This brings out the importance of non-food inputs in food security.
Stability: To be food secure, a population, household or individual must have access to adequate food at all times. They should not risk losing access to food as a consequence of sudden shocks (e.g. an economic or climatic crisis) or cyclical events (e.g. seasonal food insecurity). The concept of stability can therefore refer to both the availability and access dimensions of food security.
12 3. RESEARCH METHODOLOGY
This chapter discusses the process used to carry out the research. It discusses the type of the research, the data collection, data processing, data analysis and study limitations.
3.1. Type of research
This research is a case study; assessing firm-farmers relationship, between Nyanza dairy and farmers who supply milk to the dairy. Dairy sector depends on several factors and this makes its study a bit complex. A number of researches have been carried out and focused on several issues in the dairy sector. However, not enough research has been done on the relation between farmers and processors. This research is based on the idea that good relationships between farmers and processors would help everyone in the milk industry to understand what it takes and needs to both succeed at the same time.
3.2. Research area
Data was collected from Nyanza dairy and farmers that do supply milk to the dairy. My choice of Nyanza dairy was motivated by the importance of milk production in this region. Nyanza dairy is located in Nyanza district but farmers come from mainly Nyanza and other neighboring districts. Nyanza is the second largest region in the country in milk production after Umutara. The background and the problem statement described the overview of fundamental issues in the dairy sector in Nyanza district. However, in order to gain more insight, a deep research to understand relationships between farmers and processors was necessary. This section, explains which methods; I judged suitable to achieve our targets.
A desk study of preliminary data and basic knowledge will be done using books, scientific journals, and articles. In addition to that, unpublished reports from different authors and other projects and research will be used.
Figure 3.2.1: Map of Rwanda, showing Nyanza and Ruhango districts
3.3. Data collection
In order to achieve the objective and to answer research questions, several methods were used as well as several materials.
Ruhango Nyanza
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First of all data was collected through the review information already available to get a general knowledge about dairy sector in Rwanda, the case study and the firm-farmer relationship. Books, articles and several reports were used.
Interview with farmers and the dairy
At the beginning of the field work, meetings with key persons among farmers and the Nyanza Dairy staff were organized to get the views on the business case. A semi-structured interview was used to get detailed information. During this stage, I also got the opportunity to communicate the importance of the tool to respondents. A check list with possible challenge areas was also used to make sure that some important questions are missed out.
Table 3.3.1: Selection of respondents for case description
Type of respondent Total Function Sex
Male Female Farmers (Respondent) 4 MCC quality manager
MCC Accountant Farmer 1 1 1 1
Firm (Respondent) 3 Manager
Accountant Production Manager 1 1 1 Milk collectors (Respondents)
2 Collecting milk from farmers and delivery to MCC
2
Statement formulation and review
Based on information collected from both the desk study and the primary data collection a case description report was compiled, and a list of statements was formulated. Mr. Murasira Pascal from the Agri-pro-Focus Rwanda and Mr. Ted Schrader from CDI reviewed statements reviewed statements and suggested some changes and improvements.
Business case assessment tool (2-2 Tango)
The assessment was done using the 2-2 Tango tool. This is a research tool that allows gathering views from respondents by scoring a set of same statements. (Appendix A)
During this process, both farmers and Nyanza dairy scored same statements and the scoring consisted indicating the level of agreement with the statement. Statements were grouped depending on challenge areas.
Our respondents were in two different groups made of farmers and Nyanza dairy. All the personnel of the dairy that were initially interviewed participated in the scoring exercise too. Farmers were selected among two cooperatives: Gwizumukamo from Busoro Sector and Turengere Aborozi in Kirengere sector.
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In order to realize this research, I chose to work with cooperatives hoping that it would be easier to meet with farmers through cooperatives. I realized that farmers expect to get per diem when they are called for such activities. As mentioned in chapter 2.3.2 this habit was introduced by development agencies.
This happened with Busoro farmers and I had to meet them at their farms and it was challenging as I could only meet 5 farmers per day. In the future it would be good to first make sure that farmers are willing to meet as a group but also efforts have to be made to change the mind set about being given allowances.
Figure 3.3.1: Farmers during business assessment
Table 3.3.2: Clustering of our respondents (Busoro farmers)
Type of respondent Number Function Gender
Male Female
Farmers 11 Production 8 3
Nyanza Dairy 3 Processor 3 0
Table 3.3.3: Clustering of our respondents (Busoro farmers)
Type of respondent Number Function Gender
Male Female
Farmers 13 Production 9 4
Nyanza Dairy 3 Processor 3
3.4. Data processing and interpretation of scores
The data obtained was entered in the 2-2 Tango tool to generate graphs. The 2-2 Tango tool is a research tool that is based on statements survey and data processed with excel to produce results that can clearly show and compare the relationship between two parties in terms of percentages and average scores.
15 Interpretation
The tool produces graphs which are easily understood by famers and the processor. The interpretation is based on the graphs produced which show the level of agreement or disagreement of some same statements between farmers and the dairy. The green line in sample bellow shows the average score and represents the acceptable agreement.
If scores are above the average, the relation is good and needs to be maintained. Below the average, there is a need for improvement and more discussions are necessary to establish why. More focus is also put on scores where the level of agreement is low. Example of a challenge is whereby farmers score 80% while the company scored 50%.
Figure 3.4.1: Sample scores pre challenge area
3.5. Debriefing and focus group discussions
The nature of the tool used to collect and process of the data, the 2-to-tango tool, required that after analyzing data, both the researcher and respondents discuss results. This is important in this research because it is during the debriefing that respondents reflect on results of the assessment. Each group was called to share and discuss the self-assessment results and from the discussion they can themselves identify what everyone needs to work on for a sustainable and shared dairy sector development. In Busoro sector, farmers who took part in this exercise were 28. Buhanda farmers were 11 but the discussion was more interesting as farmers in Turengeraborozi cooperative seemed to be much more interested in the results.
During this process, scoring results were presented to every group separately. Respondents were encouraged to ask results of any statement of their choice. This also helped to know which statement they were eager to know its result. Both farmers and the dairy were encouraged to see how they can approach and correct situations that are not good and how they can maintain and improve what is working well.
3.6. Limitation of the study
Although I managed to carry out our research, I encountered some limitations. Despite the fact that I had reviewed the first list of statements together with Agri-Pro-Focus and CDI, during the scoring I realized that there was still need for some improvements. This research was done on a small size of population in a short period of time. Therefore, results answer our questions but cannot really be generalized.
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The first scoring process with Gwizumukamo farmers, in Busoro sector, revealed to us that there were still some gaps that needed improvements. We decided to keep it but make another list of improved statements for the second cooperative. In the future, it would be good to first have a scoring trial before. This implies that results from both cooperatives can be compared to about 80%.
17 4. NYANZA DAIRY BUSINESS CLUSTER
This chapter discusses findings of the business case assessment. It first describes the current situation of the business case, for both Nyanza dairy and farmers and follows results of the 2-2 Tango tool with some comments.
4.1. Business case current situation
Currently the dairy operates in old buildings and is equipped with old machines, one line by each product.
The dairy employs 32 staff out of whom 18 are women. Part of the processed milk, almost 30%, comes from Songa farm. Songa farm, formally owned by ISAR currently belongs to the dairy with 370 exotic cows on around 400 ha.
Figure 4.1.1: Nyanza dairy building
Nyanza dairy is a business oriented company but on another hand it still belongs to the state. For that reason, it has a legal responsibility to assist famers. For the moment, what they do is to only accept their milk production. The dairy also owns milk cans and rent them to MCCs and other suppliers who want to supply milk to the dairy. In the past, middle men have been trained on how to taste acidity and water content. In case one of the MCCs has a problem of electricity and the generator does not work, the dairy offers a car to bring milk instantly to the dairy.
Challenges faced by the dairy.
Old machinery
The dairy machinery and buildings are old to the point that they all need a complete innovation. “One of the main challenges we always face, is that our machines are very old and often have technical problems” Said the manager.
Spare parts and technicians
Whenever there is a need for a spare part, it has to be brought all the way from the Netherlands and this result in inactivity for a certain period of time which in turn causes loss of milk through
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the whole milk value chain. Technicians also sometimes come from out of the country and it takes plenty of time to repair the faulty machines.
Milk production increase
The Government wants all the milk to be processed, yet Nyanza dairy is the only milk processing plant in the area; this means that it is supposed to receive and process all the milk produced regardless of its condition described above. The dairy, much as it is state owned; it is considered as a business entity and cannot accept any loss that could be averted. On one side, the diary demands MCCs to only supply milk to the dairy, but on the other side the dairy is sometimes not able to receive all the production. The plant was initially enough, but with the current milk production which has increased to almost three times, there is a clear need for innovation and expansion.
4.2.
Cooperatives
Nyanza dairy works with several farmers’ groups as mentioned in the point 2. Initially we had chosen to do our research on the relationship between the dairy and Gwizumukamo cooperative. The reasons that made us to choose Gwizumukamo are that, first, it is the one that is far from the dairy and secondly according to Nyanza dairy it is the one that supplies a larger quantity when compared to other cooperatives. Gwizumukamo cooperative started its operations in September 2008; it is located 37 kilometers away from Nyanza dairy in Busoro sector.
In course of our field work, we also decided to include farmers of Turengeraborozi of Buhanda Sector in Ruhango district. This was mainly requested by CDI but also it was an opportunity to get more farmers in the scoring process because those we managed to meet at Busoro were not sufficient.
4.2.1. Functioning of the cooperatives 4.2.1..1. Gwizumukamo cooperative
Farmers have been grouped in a cooperative called Gwizumukamo2 since September 2008. They are the owners of Busoro MCC. In total they are all 136, 106 men and 30 women. Busoro MCC is equipped with a modern house, a milk tank of 2000 litres and generator to work as a backup in case there is no electricity.
Members choose their leaders committee which is in charge of the cooperative management, but mainly the management of the MCC. Members meet once a month. Two permanent staff are employed by the cooperative, one in charge of receiving milk and another of the accounts. Farmers interviewed were happy with the current elected committee but accused the former one to have mismanaged the cooperative.
2
19 4.2.1.2. Turengere Aborozi Cooperative
This cooperative is made of 28 members who are all farmers. It is located in Kirengere sector, Ruhango district, a district neighboring Nyanza district. This cooperative started in 2009 through PADEBL project. Similarly to farmers of Busoro, they own a MCC in a new and modern house, a milk tank of 2000 litres and a generator. The MCC is located in Buhanda city centre, on the road connecting to Karongi, former Kibuye. This road is not tarmac but in good condition compared to the one to Busoro.
Their functioning is similar to the one of Busoro but it seems that Buhanda farmers are more united, happy with their union than Busoro farmers.
4.2.2.
Challenges faced by farmers i. Production lossOne of the main challenges that farmers face is the loss of their milk when the dairy is not working. They are the ones to lose because they cannot supply their milk to the MCCs. When the dairy is not able to process milk, it informs the MCC that it should not receive milk. The farmer who is supposed to always sell his produce to the dairy finds himself in a situation where he is the one to lose as he cannot instruct cows not to release milk. MCC mentioned that in case they get such message from the dairy and they still have milk in the tank, they try to sell it at a lower price and to any buyer. The experience is that most buyers who bought milk under such situations either did not pay for the milk or paid with difficulties.
ii. Late payments
The selling of milk starts from the farm. A farmer gives milk to the milk collector who goes around to different farmers and keeps records of every farmer he has collected from. The same records are also kept by the farmer. The milk collector supplies the collected milk to the MCC and the MCC keeps records from every milk collector.
Farmers expect to be paid after fifteen days. After every 15 days of supplying milk, the dairy starts processing payments. During our interviews, the dairy informed us that it only takes three to five days. A payment order is then sent to the bank. In the bank, it also takes 3 to 5 days. The MCC that has to pay milk collectors and in turn pay farmers said that it never goes beyond two days before money is credited on their account. Under normal conditions, the farmer gets his money between seven and thirteen days, after the fifteen days of the supply. Some of the farmers that were interviewed complained that sometimes it even takes 2 months before they get paid, yet they expected their payments after fifteen days. This will be discussed later in 2-2 Tango results where we shall see that farmers scored very low on payment issues while the dairy scored high.
20 iii. Artificial insemination
Another challenge is that farmers are requested to practice artificial insemination but sometimes they don’t get this service timely when needed due to lack of semen or the unavailability of the vet. Due to health conditions of cows, the level of artificial inseminations failure makes farmers believe that the old method is still the best option.
iv. Feeds and medicines
During the dry season, feeds are scarce because the main feeds is grass and yet they don’t know how to preserve it. Initially, according to farmers, the cooperative was not well managed but at the moment farmers are happy with the newly elected committee.
4.3. Milk collectors (Abakamyi in Kinyarwanda)
The role played by these people in the dairy sector is to be considered. First of all it is stressed in the name given to them. Umukamyi comes from the word gukama which means to “milk”. Even though their role is just to collect milk and supply it to the MCC, they are considered the ones that milk cows. At first, I thought they were the owners of cows, their actual role is trading. As the MCC, they get milk cans from the MCC and are requested to supply milk to them. They then go around collecting milk from farmers.
They are the first people that measure and test the milk. They have forms where they note the quantity of milk received from the farmer and the farmer also keeps with the same records. During payments, milk collectors are also the ones that move around and make these payments to the farmers. Their daily and direct contact with farmers and the MCC places them in a position that whoever wants to understand or do
anything in the field needs to pay attention to them.
21 4.4. Production
Over the last five years, dairy farming in Rwanda has become more intensive to increase the amount of milk produced by each cow and each farmer. This resulted in an increase of milk production for some farmers from 1 or three litres per cow to more than 20 liters per cow. The MCC receives around 1000 liters of milk per day during rainy season and 600 liters per day in the dry season. Farmers that were interviewed were happy about the milk production but were worried that the market is not assured.
Table 4.4.1:Milk collected and sold by Busoro MCC
M o n t h Total Nyanza Total Busoro Other buyers Grand Total
Feb-11 12,165.00 52.00 - 12,217.00 I. Mar-11 15,768.50 4.00 - 15,772.50 Apr-11 1,008.00 48.00 13,237.00 14,293.00 May-11 7,055.00 1,522.50 8,849.50 17,427.00 Jun-11 11,532.00 1,142.50 8,040.00 20,714.50 Jul-11 4,978.00 355.50 8,946.00 14,279.50 Aug-11 1,060.00 32.00 4,149.50 5,241.50 Sep-11 - 32.50 4,810.00 4,842.50 oct-11 12,510.00 6.00 - 12,516.00 Nov-11 2,064.50 8.00 - 2,072.50 Dec-11 3,429.50 - - 3,429.50 Jan-12 4,284.00 3,834.50 - 8,118.50 Feb-12 9,600.50 1,210.50 - 10,811.00 mrt-12 9,948.00 4,552.00 - 14,500.00 Apr-12 13,611.50 1,161.00 - 14,772.50 May-12 2,506.50 388.00 - 2,894.50 Jun-12 7,175.00 2,674.00 - 9,849.00 Jul-12 13,968.50 1,886.00 - 15,854.50 Aug-12 8,201.50 687.00 - 8,888.50 Total 140,866.00 19,596.00 48,032.00 208,494.00 Percentage 67.56 9.40 23.04 100.00 Source: Majyambere.
4.5. Quality and standards
Milk is a product that requires high level of hygiene and respect for the required standards. From the farm to the dairy, tests are carried out to check if the received milk meets the requirements. Two principle tests are always supposed to be done at every point, namely: acidity and density tests. The acidity tests measures the extent to which the microbial action caused the milk to ferment. Each and every milk collector is trained on how to carry out both
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tests. One of them, when asked if he tests all the milk he collects, he revealed to us that he does not test every production from all farmers. He said:
“I do the test once and keep monitoring the quantity of milk I receive from the farmer. When I notice an increase, I then have to test milk because in normal situation the production should decrease not increase. So farmers don’t notice when I actually carry out the test.”
At the dairy level, when the cooperative or any other individual brings milk, the first step is testing of the acidity and the density. Observation is also done to check the milk colour and as well as its scent. “We only accept milk that meets quality requirements, we cannot bear the loss when the quality turns out bad” said one the dairy staff.
During our stay at Busoro MCC, the MCC supplied milk and it so happened that its quality was not as good as required. The level of acidity was slightly above the normal. In such cases, the dairy receives the milk but has to first boil it in the presence of the supplier. In case the boiling process fails (by clotting) the dairy does not accept and farmers lose.
Figure 4.5.1: Milk reception at Nyanza dairy.
4.6. Markets and prices
Generally, Rwanda milk producers do not satisfy the country’s needs. This can be evidenced by the fact that all the products of Nyanza dairy are usually sold out immediately. Nyanza dairy mainly produces cad milk and yoghurt but also occasionally Cheese. Yoghurt is the most preferred on the market demand. All products are sold in bulk to wholesalers who sell on retail prices or distribute to different markets in the country. According to the Nyanza dairy manager, the market is readily available and will continue to be so, for long in the future.
Farmers do have the market for their milk production but all the farmers we interviewed were not happy with the price. The main buyer for those in the cooperative is the dairy through the MCC. The MCC also sell some to kiosks and restaurants nearby.
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“We are losing a lot. When you compare how much a bottle of banana beer or sorghum costs to the price we get paid, it is a shame” Said a farmer.
Prices are always set by Nyanza dairy and other small buyers in the area follow the wave determined by the main player. To determine the price that farmers should get, the dairy first calculates all the expenses needed to get the final product on the market. This means that the dairy also considers how much it will sell the final product. According to the Nyanza dairy, the diary belongs to the state, hence the main objective is not to make huge profits but to assist farmers. This means that the farmer gets a reasonable price depending on the market demand. “We pay higher than any other buyer, but MCCs may be paying little because of the service offered to farmers” said the dairy Manager.
4.7. Contracts
Any form of contract or agreement goes with the flow of milk from the farmer to the processor. In the case of Nyanza dairy, farmers are grouped in cooperatives. Middle men, known as milking men (Abakamyi in the local language) collect milk from different farmers and supply milk collection centers. Those are independent business men and their role in the dairy sector should not be minimized as they are the ones who regularly get in contact with farmer. The dairy gives milk cans to MCCs and in turn MCCs are expected to supply milk to the dairy. The MCC also gives cans to middle men who are therefore requested to supply milk to MCC.
Only milk collectors have signed contracts with the MCC. The contract clearly stipulates that the milk collector should never sell milk to any other buyer a part from the MCC. The MCC also agrees to pay on time.
Supply contracts, between the dairy and the MCCs, are subject to a flexibility that is specific to the situation. Even though farmers have the responsibility to supply milk as provided by agreement, they also have the freedom to sell some quantity if necessary. To quote the dairy manager he said:
“Sometimes the dairy is obliged to close eyes when it comes to side selling. This is because sometimes the dairy is also not able to take all the milk production”.
It is the same situation between MCCs and middle men, but all milk collectors interviewed said that they just don’t collect milk when the MCC is not ready to receive it. This means that in their contract they are supposed to only supply to the MCC but the MCC in not able to ensure the market always.
4.8. Cost and benefits
When it comes to costs and benefits, the dairy, like any other business entity at its level, knows very well what it gets from what it invests. They even determine the price at which to give the farmer after calculation of how it would cost them to get and sell one litre of milk. Farmers are happy with the increase of production but none of our interviewees knew what it costs him to produce one litre of milk hence they cannot really know whether the dairy farming is profitable or
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not. It is not easy to determine how much one litre of milk costs. All they know is that they don’t get profits from dairy farming.
4.9. Business assessment results
4.9.1. Busoro MCC results
For all challenge areas, the average score is 56,8%. Both farmers and the dairy agree that the production is still very low. When it comes to stakeholders, there is a high difference in scores; we will later see what reasons are behind this. About quality, costs and profits both the company and farmers are positive and seem to be in agreement ( Appendix B).
Table 4.9.1: Challenge areas, Busoro
1. Challenge areas 2. 1 3. Production
4. 2 5. Cooperative functioning 6. 3 7. Market and prices 8. 4 9. Contract
10. 5 11. Quality and standards 12. 6 13. Cost and profits 14. 7 15. Stakeholders
It is clearly remarkable that in general both farmers and the dairy are below the average on many challenge areas. It is only on challenge area five and six that all are positive.
Figure 4.9.1: Overall scores
It can be observed that the perceptions of farmers and the company are quite different for challenge area 4 (contracts) and area 7 (stakeholders).
On challenge area 3 (market and prices), challenge area 5(quality and standards) and 6 (cost and profits) farmers do almost agree with the dairy on those issues.
25 Figure 4.9.2: Level of agreement per challenge area
1. Challenge area “Production” Table 4.9.2: Statements production
Statements challenge area “Production” 1.1 Farmers have high milk producing cows
1.2 Farmers have enough knowledge in high milk production 1.3 Milk production is increasing
1.4 Farmers have enough feeds
1.5 Land to cultivate the grass in enough
1.6 High milk production feeds(Concentrates) are affordable 1.7 Medicines are affordable
1.8 The farmer is able to calculate the cost of one litre of milk 1.9 Farmers are trained in dairy farming
Gra ph 1a
26
The company thinks that farmers have enough land to cultivate the fodder while farmers say they don’t.
Both the dairy and farmers give low score to the last four statements (cost of feeds, medicines, cost calculation and trainings).
About the availability of good milking cows, we can see that farmers are more or less happy with the current level while the dairy would like to see more
Figure 4.9.4: Level of agreement on production
Production is in general a point farmers have different views from the dairy.
On the point 6, feeds affordability to the farmers, it is clear that they all accept that it is not affordable at all; 1% for farmers and 30 for the dairy. This probably is the least scored statement. Also medicines are expensive. In terms of training, even though farmers and the dairy score very far from the average score the dairy insists that it offers training to the farmers.
2. Challenge area cooperative functioning
Table 4.9.3: Statements Challenge area cooperative functioning
Statements challenge area “Cooperative functioning” 2.1 The MCC treats all farmers equally
2.2 The MCC is important in the dairy marketing 2.3 The MCC represents farmer’s interests
2.4 Milk collectors are important in dairy marketing 2.5 Farmer’s representatives work for farmers interests 2.6 Milk collectors do their job correctly
2.7 Farmers are happy with the cooperative functioning 2.8 Farmers know how the cooperative finances are managed 2.9 Farmers understand the importance of being in cooperatives
27 Figure 4.9.5 Scores, Cooperative functioning
For the MCC, all farmers are treated in the same way. Stamen (1) even those who do not belong to the cooperative, their milk is collected regardless of their membership. The importance of the MCC is highly appreciated by both farmers and the dairy. 93.9% for farmers and 88.9% for the dairy. With regard to the management of the cooperative’s finances, both parties are skeptic. It can also be observed that farmers do trust the cooperative management even though the dairy’s trust is low.
It can be observed that the level of agreement in this area is not high. It is only on statement 2 (The importance of the MCC) and statement 9 (Importance of being in cooperatives) that the level of agreement is a bit high. Farmers and the dairy differ in the way they see the importance of milk collectors even though they all agree that they are important. About the functioning of milk collectors, the low agreement is based on the fact that expectations are different from farmers and the dairy. For the farmer, milk collection process is perfectly done, whereas for the dairy, performing its task perfectly means checking the milk quality all the time.
28 3. Challenge area “Market and prices
Table 4.9.4: Statements challenge area market and prices
Statements challenge area “Market and prices” 3.1 There is enough market for milk
3.2 Famers know the requirements on milk quality 3.3 Farmers decide where to sell their milk
3.4 The farmer gets a fair price
3.5 The dairy accepts all the collected milk
3.6 Other buyers give a higher price than the dairy 3.7 The dairy accepts milk all the time
3.8 The dairy pays on time
3.9 The farmer benefits from price changes
Figure 4.9.7: Scores challenge area 3
It can be observed that farmers are negative about the price they get, (24.2%) while the dairy thinks that there is no problem with the pricing. (77.8%). Statement 4, about the availability of the market, farmers and the dairy scored below that average line. About the capacity of the dairy to handle all the milk production (statement 7) both sides scored below the average. Statement 9 (Changing of prices) shows that whenever there is a change in prices it benefits the dairy not the farmer.
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Figure 4.9.8: Level of agreement for market and prices
It can be observed that the level of disagreement about the fairness of the price is high, and that whenever it changes it is the dairy that benefits from the change. Here there is a case of absolute agreement about the knowledge of the quality requirements and standards. About other buyers paying a higher price than the one offered by the dairy, farmers and buyers scored slightly above the average area but they all have the same view.
4. Challenge area “contract and agreements” Table 4.9.5: Scores for contract and agreements
Statements challenge area “contract and agreements”
4.1 Contracts and agreements are important in milk market 4.2 Farmers understand the content of contracts
4.3 Farmers can negotiate contracts with the dairy 4.4 Farmers are consulted in contracts preparations 4.5 The cooperative respects the contract and agreements 4.6 The dairy respects contracts and agreement
4.7 Milk collectors respects the contract
4.8 Contracts are clear about dispute settlements 4.9 Farmers are allowed to sell to other buyers.
